Europe

German Cabinet Approves €520B Budget for 2026

Published JUL 30 2025

Story

Above: German Chancellor Friedrich Merz, Federal Minister of Finance Lars Klingbeil, and Head of the Chancellery Thorsten Frei on July 30, 2025. Image credit: Emmanuele Contini/NurPhoto/Getty Images

The Facts

The German Federal Cabinet approved a draft budget for 2026 totaling €519.5 billion in spending on Wednesday, representing an increase of approximately €17 billion compared to the planned 2025 budget of €503 billion.
The Federal Government
Bundesministerium der Finanzen
The 2026 budget includes record borrowing of €174.3 billion in the core budget, more than triple the €50.5 billion borrowed in 2024 under the previous government, with total planned debt reaching €851 billion from 2025 to 2029.
DIE WELT
DER SPIEGEL
Defense spending is to increase to €82.7 billion in 2026 at 2.8% of gross domestic product (GDP), an increase of €29.4 billion, with the Bundeswehr receiving an additional 10,000 jobs.
Bundesministerium der Finanzen
The budget allocates €126.7 billion for investments in 2026, marking a €10 billion increase over 2025 levels, supported by a €500 billion infrastructure fund that is exempt from Germany's debt brake constitutional limits.
Bundesministerium der Finanzen
Gesetze-Im-Internet
Finance Minister Lars Klingbeil announced that despite the spending increases, a financing gap of approximately €172 billion remains for the years 2027 to 2029, requiring spending restrictions across all ministries.
Bild
DER SPIEGEL
Alongside the 2026 budget, the cabinet meeting on Wednesday also addressed multiple legislative drafts including NIS-2 Directive implementation, the High-tech Agenda Germany, and various international economic partnership agreements with African nations.
The Federal Government

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The Spin

Pro-government narrative

Germany's bold budget represents exactly the fiscal leadership Europe needs. By utilizing reformed rules, the government is investing heavily in critical infrastructure and defense while breaking free from the counterproductive debt brake that has handicapped competitiveness for years. This strategic approach prioritizes essential investments over outdated orthodoxy, recognizing investment today secures prosperity tomorrow.

PubAffairs Bruxelles

Goldman Sachs

Government-critical narrative

Germany's budget represents fiscal recklessness disguised as progress. The government has abandoned constitutional debt limits through accounting tricks, hiding borrowing in "special funds." Meanwhile, the government cannot explain how it will make up for the near €200 billion deficit hole in its plans. With debt hitting dangerous levels and reforms ignored, Germany mortgages its future for political gain.

Euractiv

European Conservative